When talking about file systems, a folder (also called directory, or catalog) is a way to organize computer files. A folder is a storage space that many files can be placed into to group them together and organize the computer. A folder can also contain other folders. For many computer software applications, there is a current working directory. This is the folder that the application runs in. In Unix and Linux, a directory is a special type of file.
Folders can be put together to make a filesystem and are laid out like a tree. The folders inside folders are like branches and sub-branches off the tree trunk. This idea is used by the software to allow the user to navigate the folders. On some operating systems, shortcuts or links can be made from one folder to another to make it appear that one folder is contained in two different parent folders. On Unix systems, this is called a symbolic link, and is similar in function to a hyperlink.